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Schneider Electric has signed an agreement to acquire 74 per cent in power storage solutions firm Luminous Power Technologies for around Rs 1,400 crore (€215 million).
The big-ticket investment by the French electrical equipment and power-management major in the Indian power back-up market, ironically, comes just ahead of the Government's pledge to provide “power for all” by the year 2012. With the buy, Schneider Electric makes a strong entry into the fast-growing market for inverters and secured power, reinforcing the view that power shortages are here to stay, according to industry analysts.
Luminous, a leading player in the estimated Rs 5,000-crore Indian inverter and power storage market, which is growing at over 20 per cent annually, generated revenues of around Rs 1,100 crore in 2010-11. It has a wide distribution network of over 900 distributors serving over 25,000 retail outlets. The total net debt of the company was Rs 240 crore as of March 31.
Schneider Electric said it expects the acquisition to be accretive on its earnings per share from the first year. “This acquisition is another significant step for Schneider Electric to become a leader in new economies. Luminous will also provide a platform to expand the inverter market into other new economies, in particular, West Asia, Africa and South-East Asia,” said Mr Laurent Vernerey, Executive Vice-President of Schneider Electric's IT business.
Luminous' Chairman, Mr Rakesh Malhotra, said the founders, who will continue to hold 26 per cent in the firm, plan to be closely associated with the company. Luminous, which employs 3,000 people, will provide Schneider a broad customer base with 3 million existing inverter users and also access to clients in sectors such as government and telecom.
“This will help the group (Schneider) further strengthen its position in India and attain critical size in the fast growing Indian inverter market,” Mr Vernerey said.
Sales forecast
After this acquisition, Schneider Electric hopes to report a significant increase in its size of operations in India. The total sales here would exceed Rs 4,500 crore (€700 million), tripling the turnover compared to 2009 and turning India into the number seventh position in terms of overall global sales.
Grant Thornton India was the sole Financial Advisor to Luminous on the transaction.
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